Resolution HHRR Case

Economic Difficulties

Metallurgical Company Case Study


A Spanish company dedicated for more than a century to the manufacture of parts for the auxiliary machinery industry who has been supplying for years parts for the automotive industry has a total staff of 300 workers.

Due to the current economic downturn, the company has notorious losses and, although has failed in taking collective actions, he has have been forced to dismiss five workers through the objective reasons dismissal.

The company has already taken a serie of measures to overcome the negative economic situation in which is suffering. These are some of them, among others:

Construction of a new plant that where a few months ago the company moved to.

Increase capital by the partners.

Implementation of a system of preventive maintenance in order to reduce downtime by machine breakdowns, reduce maintenance costs and improve productivity.

Implementation of a computer system to manage production, especially in terms of downtime of machinery.

Training staff on new production systems with the new machinery.

Incorporation of new sellers.

Negotiation with transport companies to reduce costs.

Negotiations with banks regarding credit policies.

However, the management team still considers there are relevant excessive costs that hinder the development of the company and threaten its future.

In order to refocus this negative situation, the company hired months ago to a new head of production, Mr. Claudio Pompeyo. Pompeyo is an industrial engineer specialized in production cost reductions. After a comparative study between the production costs of the company and production costs of competing companies in the same sector, Pompeyo concluded that the cost of production of this company is 36% higher than companies competition.

This high productions costs are due to multiple salary supplements that the company has been offering employees because of the prosperous economic results from previous years.

Given the current circumstances in which the company sales have plummeted and the production has slowed down considerably stockpiling are lot of merchandise in the store, the company must reduce its workforce.

But even with less workforce, costs productions will still be far more expensive than the average price of the competition. The company cannot compete on the market and be viable if he is not reducing staff, and costs.

After the results of the Mr. Pompeyo audit conclusions, the company comes to you, your advisor in the field of Labor Relations and Human Resources, asking you to submit solutions in these that must be faced soon.

You are asked to answer the following 3 questions:


  1. With the five layoffs that the company has already agreed with some workers, do you overcome the limits for consideration of individual dismissals? If not, is there still room for further individual dismissals for objective reasons?


  1. Do you think those given supplements to workers could have been given in a way that now, when things are tough, could have been withdrawn?


  1. What do you propose to enable the future viability of the company?